The retroviral structural protein, Gag, contains small peptide motifs known as late domains that promote efficient virus release from the infected cell. In addition to the well-characterized PTAP late domain, the p6 region of HIV-1 Gag contains a binding site for Alix. To better understand the functional role of the GagAlix interaction, we overexpressed an Alix fragment comprised of residues 360-702 (the Alix V domain) and examined the effect on release of WT and Alix-binding-site-mutant HIV-1. We observed that C-domain expression significantly inhibited WT virus release and Gag processing and that mutation of the Alix binding site largely relieved this inhibition. Furthermore, Alix C-domain expression induced a severe defect on WT but not mutant particle morphology. Intriguingly, the impact of Alix C-domain expression on HIV-1 release and Gag processing was markedly different from that induced by mutation of the Alix binding site in p6. The association of the Alix C-domain with HIV-1 and equine infectious anemia virus (EIAV) late domains was quantitatively evaluated by isothermal titration calorimetry and surface plasmon resonance techniques and the effects of mutations in these viral sequences on C-domain binding was determined. This study identifies a novel Alix-derived dominant-negative inhibitor of HIV-1 release and Gag processing and provides quantitative information on the interaction between Alix and viral late domains.[unreadable] [unreadable] [unreadable] The Gag p6 protein of HIV-1 contains a LYPXnLXXL motif that is required for Alix-mediated budding and binds to a region of Alix spanning residues 360-702. The structure of this fragment of Alix has the shape of the letter V and is termed the V domain. The V domain has a topologically complex arrangement of eleven -helices, with connecting loops that cross three times between the two arms of the V. The conserved residue Phe676 is at the center of a large hydrophobic pocket and is critical for binding to a peptide model of HIV-1 p6. As described above, overexpression of the V domain inhibits HIV-1 release from cells. This inhibition of release is reversed by mutations that block binding of the Alix V domain to p6.